1
Exhibit 99a
Dexter Corporation
Condensed Statement of Income
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In thousands of dollars Three Months Ended September 30 Nine Months Ended September 30
(except per share amounts) ----------------------------------------- -----------------------------------------
1998 1997 Change 1998 1997 Change
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues
Net sales $ 283,357 $ 286,928 - 1% $ 875,885 $ 852,413 + 3%
Other income 2,528 2,349 + 8% 7,198 9,275 - 22%
------------ ------------ ------------ -----------
285,885 289,277 - 1% 883,083 861,688 + 2%
Expenses
Cost of sales 179,220 182,758 - 2% 555,597 545,300 + 2%
Marketing and administrative 60,015 59,698 + 1% 183,948 175,747 + 5%
Research and development 13,808 13,442 + 3% 42,274 40,499 + 4%
Interest 4,534 5,287 - 14% 13,213 15,585 - 15%
------------ ------------ ------------ -----------
Income before Taxes 28,308 28,092 + 1% 88,051 84,557 + 4%
Income taxes 9,908 10,113 - 2% 30,818 30,441 + 1%
------------ ------------ ------------ -----------
Income before Minority Interests 18,400 17,979 + 2% 57,233 54,116 + 6%
Minority interests 4,222 3,736 + 13% 12,408 11,004 + 13%
------------ ------------ ------------ -----------
Net Income $ 14,178 $ 14,243 $ 44,825 $ 43,112 + 4%
============ ============ ============ ===========
Net Income per Share - basic $0.62 $0.62 $1.95 $1.87 + 4%
Net Income per Share - diluted $0.61 $0.61 $1.92 $1.84 + 4%
Dividends Declared per Share $0.26 $0.24 + 8% $0.76 $0.72 + 6%
Average Shares Outstanding (000) - basic 23,034 22,914 + 1% 22,998 23,037
Average Shares Outstanding (000) - diluted 23,130 23,184 23,204 23,228
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See accompanying notes to the consolidated financial statements.
Amounts are unaudited.
2
Exhibit 99b
Dexter Corporation
Condensed Statement of Financial Position
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In thousands of dollars September 30 December 31 September 30
(except per share amounts) ---------------------------------------------
1998 1997 1997
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Assets
Cash and short-term securities $ 89,066 $ 68,306 $ 86,501
Accounts receivable, net 205,515 185,257 203,265
Inventories:
Materials and supplies 66,367 61,233 59,860
In process and finished 127,917 117,467 119,622
LIFO reserve (17,625) (18,799) (18,631)
------------ ------------ ----------
176,659 159,901 160,851
Prepaid and deferred expenses 29,428 26,988 32,628
------------ ------------ ----------
Total current assets 500,668 440,452 483,245
Property, plant and equipment, at cost, net 360,536 348,172 343,301
Excess of cost over net assets of
businesses acquired 94,766 97,507 76,373
Other assets 74,466 75,645 49,118
------------ ------------ ----------
$ 1,030,436 $ 961,776 $ 952,037
============ ============ ==========
Liabilities & Shareholders' Equity
Short-term debt $ 37,804 $ 35,361 $ 3,705
Current installments of long-term debt 12,805 13,340 31,553
Accounts payable 94,385 91,155 98,045
Accrued liabilities and taxes 95,680 89,076 108,381
Current environmental reserves 1,746 2,099 2,223
Dividends payable 5,989 5,505 5,502
------------ ------------ ----------
Total current liabilities 248,409 236,536 249,409
Long-term debt 182,519 180,030 168,459
Deferred items 56,592 54,197 51,394
Long-term environmental reserves 13,649 13,726 14,154
Minority interests 121,357 104,426 100,985
Shareholders' equity:
Common stock and paid-in capital 37,686 38,158 37,524
Retained earnings 437,183 409,844 402,034
Treasury stock (49,749) (52,216) (52,524)
Accumulated other comprehensive
income (17,210) (22,925) (19,398)
------------ ------------ ----------
Total shareholders' equity 407,910 372,861 367,636
------------ ------------ ----------
$ 1,030,436 $ 961,776 $ 952,037
============ ============ ==========
Equity per Share $ 17.71 $ 16.26 $ 16.04
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See accompanying notes to the consolidated financial statements.
Amounts as of September 30, 1998 and September 30, 1997 are unaudited.
3
EXHIBIT 99c
DEXTER CORPORATION
CONDENSED STATEMENT OF CASH FLOWS
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Nine Months Ended September 30
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In thousands of dollars 1998 1997
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OPERATIONS
Net income $ 44,825 $ 43,112
Noncash items:
Depreciation and amortization 38,631 33,955
Income taxes not due 7,480 1,453
Minority interests 12,408 11,004
LIFO inventory credit (1,174) (1,205)
Equity in net income of affiliates (2,156) (3,520)
Other 1,423 674
Operating working capital increase (32,885) (27,508)
-------------- ----------------------
68,552 57,965
-------------- ----------------------
INVESTMENTS
Property, plant and equipment (44,056) (45,092)
Acquisitions (1,781) (20,661)
Divestitures 41,539
Joint ventures 2,707 2,102
Proceeds from exercise of LTI stock options 5,230 3,164
Other (683) 3,258
-------------- ----------------------
(38,583) (15,690)
-------------- ----------------------
FINANCING
Long-term debt, net 4,992 (21,197)
Short-term debt, net 2,512 (1,256)
Dividends paid (17,002) (16,226)
LTI dividends paid to minority interest shareholders (1,703) (1,307)
Purchase of treasury stock (20,517)
Other 984 3,069
-------------- ----------------------
(10,217) (57,434)
-------------- ----------------------
INCREASE (DECREASE) IN CASH AND SHORT-TERM SECURITIES $ 19,752 $ (15,159)
============== ======================
RECONCILIATION OF INCREASE (DECREASE) IN CASH AND
SHORT-TERM SECURITIES
Cash and short-term securities at beginning of period $ 68,306 $ 103,420
Cash and short-term securities at end of period 89,066 86,501
-------------- ----------------------
Increase (Decrease) in cash and short-term securities
per Statement of Financial Position 20,760 (16,919)
Currency translation effects (1,008) 1,760
============== ======================
$ 19,752 $ (15,159)
============== ======================
Property, plant and equipment for the nine months ended September 30, 1998
includes $4,635 related to the exercise of an option to purchase land under a
capital lease by Life Technologies, Inc.
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See accompanying notes to the consolidated financial statements.
Amounts are unaudited.
4
EXHIBIT 99d
DEXTER CORPORATION
STATEMENT OF COMPREHENSIVE INCOME
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Three Months Ended September 30 Nine Months Ended September 30
------------------------------- ------------------------------
In thousands of dollars 1998 1997 1998 1997
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NET INCOME $ 14,178 $ 14,243 $ 44,825 $ 43,112
-------- -------- -------- --------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Currency translation effects 5,946 (3,355) 5,804 (16,580)
Unrealized gains (losses) on investments 105 (51) (89) (252)
-------- -------- -------- --------
OTHER COMPREHENSIVE INCOME (LOSS) 6,051 (3,406) 5,715 (16,832)
-------- -------- -------- --------
COMPREHENSIVE INCOME $ 20,229 $ 10,837 $ 50,540 $ 26,280
======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------
See accompanying notes to the financial statements.
Amounts are unaudited.
5
EXHIBIT 99e
NET SALES BY MARKET Dexter Corporation
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Three Months Ended September 30 Nine Months Ended September 30
------------------------------------------ -----------------------------------------
In thousands of dollars 1998 1997 Change 1998 1997 Change
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AEROSPACE $ 17,934 $ 15,906 +13% $ 53,314 $ 45,090 +18%
ELECTRONICS (1) 45,566 55,577 -18% 151,271 159,426 -5%
FOOD PACKAGING (2) 69,962 70,522 -1% 210,458 207,800 +1%
MEDICAL 114,956 106,881 +8% 346,011 322,106 +7%
OTHER 34,939 38,042 -8% 114,831 117,991 -3%
-------- -------- -------- --------
CONSOLIDATED $283,357 $286,928 -1% $875,885 $852,413 +3%
======== ======== ======== ========
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(1) The effect of businesses acquired increased net sales to the Electronics
market by $1.8 million, or 3%, for the quarter, and $5.7 million, or 4%,
year-to-date.
(2) The effect of businesses acquired increased net sales to the Food Packaging
market by $3.5 million, or 5%, for the quarter, and $13.4 million or 6%,
year-to-date.
Amounts are unaudited.
6
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements
Note 1 - In the opinion of the Company's management, the unaudited
financial statements reflect adjustments of a normal recurring nature
which are necessary to present fairly the results for the interim
periods. The notes to the condensed consolidated financial statements,
including management's discussion in Part 1, Item 2 of this Form 10-Q,
are incorporated as part of these condensed consolidated financial
statements. The year-end condensed balance sheet data was derived from
the audited financial statements.
Note 2 - Presented below is the reconciliation between basic earnings
per share and diluted earnings per share for the three and nine-month
periods ended September 30, 1998 and 1997:
Three Months ended Nine Months ended
September 30 September 30
Amounts in thousands ------------------------- -------------------------
(except per share data) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------
EARNINGS PER SHARE - BASIC:
Net income $ 14,178 $ 14,243 $ 44,825 $ 43,112
Weighted average shares
outstanding 23,034 22,914 22,998 23,037
Earnings per share - basic $ .62 $ .62 $ 1.95 $ 1.87
EARNINGS PER SHARE - DILUTED:
Net income $ 14,178 $ 14,243 $ 44,825 $ 43,112
Effect of subsidiary dilutive
options on net income (102) (137) (320) (462)
-------- -------- -------- --------
$ 14,076 $ 14,106 $ 44,505 $ 42,650
======== ======== ======== ========
Weighted average shares
outstanding 23,034 22,914 22,998 23,037
Weighted average effect of
common stock equivalents 96 270 206 191
-------- -------- -------- --------
23,130 23,184 23,204 23,228
======== ======== ======== ========
Earnings per share - diluted $ .61 $ .61 $ 1.92 $ 1.84
7
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Note 3 - In February 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 132,
Employers' Disclosures About Pensions and Other Postretirement
Benefits, which becomes effective for financial statements for fiscal
years beginning after December 15, 1997. The Company is currently
evaluating the impact of SFAS No. 132 on its financial reporting
practices.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities. The statement is
effective for all fiscal quarters of fiscal years beginning after June
15, 1999. The Company is currently evaluating the impact of SFAS No.
133 on its financial reporting practices.
Note 4 - The following are included as components of Common Stock and
Paid-in Capital:
COMMON STOCK & PAID-IN CAPITAL SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
(IN THOUSANDS OF DOLLARS) 1998 1997 1997
- ------------------------------ -------- -------- --------
Common stock $ 24,984 $ 24,984 $ 24,984
Paid-in capital 15,228 17,482 17,111
Unearned compensation on
restricted stock (2,526) (4,308) (4,571)
-------- -------- --------
$ 37,686 $ 38,158 $ 37,524
======== ======== ========
Note 5 - The following are included as components of Accumulated Other
Comprehensive Income:
ACCUMULATED OTHER COMPREHENSIVE SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
INCOME (IN THOUSANDS OF DOLLARS) 1998 1997 1997
- -------------------------------- -------- -------- --------
Currency translation effects ($16,671) ($22,475) ($18,767)
Unrealized losses on investments (515) (426) (427)
Pension liability adjustment (24) (24) (204)
-------- -------- --------
($17,210) ($22,925) ($19,398)
======== ======== ========
8
Exhibit 99f
Dexter Corporation
Notes to Condensed Consolidated Financial Statements (continued)
Note 6 - On July 7, 1998, the Company announced plans to acquire the
remaining 48% equity in Life Technologies, Inc., a 52% Dexter-owned
subsidiary and the divestiture of its Packaging Coatings business
including Dexter S.A.S., its French industrial coatings subsidiary.
On July 7, 1998 the Company proposed to the Life Technologies' Board of
Directors that it acquire the approximately 11.3 million shares of Life
Technologies it does not currently own at a price of $37 per share in
cash, or approximately $420 million, net, excluding payment for
exercisable stock options. On October 27, 1998, a special committee of
independent directors of the Life Technologies Board that had been
considering the Company's proposal advised the Company that it would
not recommend approval of its offer. On November 2, 1998, the Company
commenced a tender offer for $37 per share in cash, for all outstanding
shares of common stock of Life Technologies, Inc. that it does not
currently own. Consummation of the tender offer is conditioned (subject
to waiver) upon the Company receiving sufficient shares to own at least
80% of all outstanding Life Technologies shares, but is not conditioned
upon financing or any approval of the Life Technologies Board of
Directors or any committee thereof. The offer is scheduled to expire on
Tuesday, December 1, 1998, at midnight New York City time, unless
extended. The acquisition of the publicly owned shares of Life
Technologies offers its shareholders a 19.4% premium over the closing
price immediately prior to the July 7 announcement. The offer will be
financed through Dexter's available cash and a committed credit
facility arranged by First Chicago Capital Markets, Inc. On November 5,
1998, the Company announced that it had received copies of letters from
Frank E. Samuel, Jr. and Iain C. Wylie (former members of the special
committee) resigning as directors of Life Technologies, Inc.
In August 1998, the Company announced it had signed a definitive
agreement to sell its Packaging Coatings business, including Dexter
S.A.S., to The Valspar Corporation. The transaction is expected to
close by year-end. Dexter's Packaging Coatings, a business that has a
range of products serving the beer, beverage and food can, aerosol and
tube markets, and Dexter S.A.S. had combined 1997 sales of $208
million.
9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Dexter Corporation
We have reviewed the accompanying condensed statement of financial position of
Dexter Corporation as of September 30, 1998 and 1997, and the related condensed
statements of income and comprehensive income for the three and nine-month
periods then ended and the condensed statement of cash flows for the nine-month
periods then ended. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial position of Dexter
Corporation as of December 31, 1997 and the related consolidated statements of
income, cash flows, and changes in shareholders' equity for the year then ended
(not presented herein); and in our report dated February 3, 1998, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed statement of
financial position as of December 31, 1997 is fairly stated, in all material
respects, in relation to the consolidated statement of financial position from
which it has been derived.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Springfield, Massachusetts
October 13, 1998